Abstract

http://ssrn.com/abstract=925348
 
 

References (40)



 
 

Citations (31)



 


 



Bringing it Home: A Study of the Incentives Surrounding the Repatriation of Foreign Earnings Under the American Jobs Creation Act of 2004


Jennifer L. Blouin


University of Pennsylvania - Accounting Department

Linda K. Krull


University of Oregon

July 21, 2008


Abstract:     
The American Jobs Creation Act of 2004 (the Act) creates a temporary tax holiday that effectively reduces the U.S. tax rate on repatriations from foreign subsidiaries from 35 percent to 5.25 percent. Firms receive the reduced tax rate by electing to take an 85 percent dividends received deduction on repatriations in 2004 or 2005. This paper investigates the characteristics of firms that repatriate under the Act and how they use the repatriated funds. We find that firms that repatriate under the Act have lower investment opportunities and higher free cash flows than non-repatriating firms. Further, we find that repatriating firms increase share repurchases during 2005 by $55.80 to $60.85 billion more than non-repatriating firms. This increase represents 19.14 to 20.87 percent of the $291.6 billion repatriated under the Act. This paper provides useful information to policy makers about the effect of a temporary tax holiday on firms' investment behavior.

Number of Pages in PDF File: 56

Keywords: Multinational Firms, Foreign direct investment, Corporate Taxation, Payout policy, Repurchases

JEL Classification: F23, G35, H20, H25

working papers series





Download This Paper

Date posted: August 20, 2006 ; Last revised: November 15, 2011

Suggested Citation

Blouin, Jennifer L. and Krull, Linda K., Bringing it Home: A Study of the Incentives Surrounding the Repatriation of Foreign Earnings Under the American Jobs Creation Act of 2004 (July 21, 2008). Available at SSRN: http://ssrn.com/abstract=925348 or http://dx.doi.org/10.2139/ssrn.925348

Contact Information

Jennifer L. Blouin
University of Pennsylvania - Accounting Department ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-1266 (Phone)

Linda K. Krull (Contact Author)
University of Oregon ( email )
1208 University of Oregon
Eugene, OR 97403-1208
United States
541-346-3252 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 1,868
Downloads: 529
Download Rank: 21,572
References:  40
Citations:  31

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.328 seconds